I think that adopting ASCII as the general purpose text encoding was one of the great mistakes of early computing. It originated as control interface for teletypes and such, and that's arguably where it should have remained. For storing and processing (plain) text ASCII doesn't really fit that well, control characters are a hindrance and the code space would have been useful for additional characters. The ASCII set of printables was definitely a compromise formed by the limited code space.
It's one of the greatest triumphs of early computing. Not only did it harmonize text representation and transmission in a backwards compatible manner; the fact that they deliberately kept it 7 bit for so long also helped for developing a sane set of other language character sets (ISO-8859), and paved the way for a smooth transition to Unicode (UTF-8) - which is now the dominant encoding worldwide.
Yeah you were not around when a kb of memory took up half your room. Looking back it doesn't make sense but at the time a byte was what-ever you wanted it to be. Considering number of characters in English language is 26, it is reasonable for a byte to be 5 bits, giving you a total of 32 possible states. Which leaves you with 6 values which could be used as control characters. how-ever lets not forget there are 7,164 other languages of the world, and they all have their own unique way of doing things.
Oh yeah, lets not forget that at the time you had other nationalistic countries/territories/people with their own superior technology all vying for the top position, all well trying to out do each other. Then you also had manipulative monopolies/trade embargo's and wars.
